Headlines:
- Hedge funds match record in sell down on soft commodities
Hedge funds approached the end of 2016 on a bearish note in agricultural commodities, cutting bets on price rises for a fourth successive week, as they stretched to a record a selling spree in softs such as cocoa and coffee. Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 37,457 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. The sell down reduced the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – to the lowest in two months. And it included bearish positioning in both grains, in which hedge funds returned to a net short position, as well as in New York-traded soft commodities, which also include cotton and sugar.
- Trump taps Lighthizer for U.S. Trade Representative
President-elect Donald Trump has picked lawyer Robert Lighthizer to head the U.S. Trade Representative office, his transition team said Tuesday in a further sign the incoming administration will take a tougher line on China. “He has extensive experience striking agreements that protect some of the most important sectors of our economy, and has repeatedly fought in the private sector to prevent bad deals from hurting Americans,” Trump said in an e-mailed statement. “He will do an amazing job helping turn around the failed trade policies which have robbed so many Americans of prosperity.”
- China’s State Information Center suggested that China could stabilize their currency with a “one-off” yuan devaluation, which sent the yuan to new record lows overnight. The SIC also expects GDP growth to slow from 6.7% to 6.5% in 2017. China’s last “one-off” devaluation was a 2% move in August 2015.
Summary:
Corn ended the day slightly higher today. Soybean continues to struggle finding positive ground. After a surprisingly strong final week to close out the year, Wheat was only down 75 cents in this 1st trading day of the New Year. Crude Oil was under pressure today giving back all the gains that it made stemming from the December 22nd low.
Weather conditions in South America remains in focus for the grain markets. The Argentine Corn crop is about 90% to 95% planted and has been the victim of planting delays because of rain. The Commitment of Traders report showed that the funds’ net short position has increased to 114k contracts but Corn continues to find legs and move higher. We believe Corn will keep moving sideways between support and resistance. Argentina has decided to reinstate refunds for Soybean exports, responding to a promise to the provinces from President Mauricio Macri but also to prop foreign trade and boost the economy. Beans lost 7.75 cents today. As far as Wheat is concerned, the Ukraine has had some winter kill concern. They are expect colder temperatures but little to no beneficial snow cover.
